Economics for the Global Manager: Heckscher-Ohlin, Ricardian theories, tariffs
As an international economist I have been asked to prepare a short speech which answers the following questions:
1. How does the Heckscher-Ohlin theory differ from Ricardian theory in explaining international trade patterns?
2. The theory demonstrates how trade affects the distribution of income within trading partners. Explain.
3. How does the Leontief paradox challenge the overall applicability of the factor-endowment model?
4. According to Staffan Linder, there are two explanations of international trade patternsâ?”one for manufacturers and another for primary (agricultural) goods. Explain.
Following that speech, the audience asks me to respond to the following question:
Describe a specific tariff, an ad valorem tariff, and a compound tariff. What are the advantages and disadvantages of each?
I need to write the text of my speech and response to the question as a Word document, including APA citations for all sources I use.
OBJECTIVE
For the discussion of the Ricardian model, Heckscher-Ohlin Model, first explain the models in simple terms. For example, for the Ricardian model explain key concepts such as gains from trade, comparative advantage and specialization ; and then how they are linked. For the H-O model, explain how it extends the Ricardian model, ie, how does it explain which country might have a comparative advantage in a particular area.
Answer the rest of the questions one at a time. Be sure to explain just what the paradox is in the Leontief Paradox. Where H-O is based on factor abundance, Linder’s theory offers an alternative explanation for trade patterns in manufactured goods. What is that explanation based upon?
